Blue Cross deal queried

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Sacramento Bee

Consumer advocates Monday called on the governor and the insurance commissioner to investigate whether Blue Cross of California has raised insurance premiums to fund a $16.5 billion merger that last year forged the nation’s largest health plan.

Before allowing Blue Cross parent company WellPoint Health Networks to merge with Anthem Inc., the Schwarzenegger administration and Insurance Commissioner John Garamendi required the companies to guarantee California patients would not pay for the deal through premium increases.

Garamendi said he is already reviewing Blue Cross financial statements about this year’s rate increases. “We are not saying to them, ‘We don’t believe you’ but we are checking it out,” he said.

Blue Cross spokesman Michael Chee said its premium increases were not caused by the merger. Rate increases were caused by increased costs of hospitals, doctors, drugs and technology, he said.

If premiums funded the merger, patients should get refunds, said Jerry Flanagan, with the Foundation for Consumer and Taxpayer Rights. This year, however, because premiums were increased before state regulators could review the rates, it could be difficult to offer refunds, Garamendi said.

The Department of Managed Care, which regulates HMOs, does not have the authority to set premiums, said spokeswoman Lynne Randolph. However, she said the Schwarzenegger administration was “aggressively tracking premiums as they relate to the merger.”

Consumer Watchdog
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